AMERICA ONLINE, INC.
1992 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
Unless otherwise specified or unless the context otherwise
requires, the following terms, as used in this America
Online, Inc. 1992 Employee, Director and Consultant Stock
Option Plan, have the following meanings:
Administrator means the Board of Directors, unless it
has delegated power to act on its behalf to a
committee. (See Article 4)
Affiliate means a corporation which, for purposes of
Section 424 of the Code, is a parent or subsidiary of
the Company, direct or indirect.
Board of Directors means the Board of Directors of the
Code means the United States Internal Revenue Code of
1986, as amended.
Committee means the Committee to which the Board of
Directors has delegated power to act under or pursuant
to the provisions of the Plan.
Common Stock means shares of the Company's common
stock, $.01 par value.
Company means America Online, Inc., a Delaware
Disability or Disabled means permanent and total
disability as defined in Section 22(e) (3) of the Code.
Fair Market Value of a Share of Common Stock means:
(1) If the Common Stock is listed on a national
securities exchange or traded in the over-the-counter
market and sales prices are regularly reported for the
Common Stock, the average of the closing or last prices
of the Common Stock on the Composite Tape or other
comparable reporting system for the ten (10)
consecutive trading days iiranediately preceding such
applicable date; •
(2) If the Common Stock is not traded on a national
securities exchange but is traded on the
over-the-counter market, if sales prices are not
regularly reported for the Common Stock for the ten
(10) days referred to in clause (l) , and if bid and
asked prices for the Common Stock are regularly _
reported, the average of the mean between the bid and
the asked price for the Common Stock at the close of
trading in the over-the-counter market for the ten (10)
days on which Common Stock was traded immediately
preceding such applicable date; and
(3) If the Common Stock is neither listed on a
national securities exchange nor traded in the
over-the-counter market, such value as the _
Administrator, in good faith, shall determine.
ISO means an option meant to qualify as an incentive
stock option under Code Section 422.
K-Pv EmDl6vee means an employee of the Company or of an
Affiliate (including, without limitation, an employee
who is alscserving as an officer or director of the
Company or of an Affiliate), designated by the
-: AdiniTaistrator: to. be eligible to be granted one or more
Options- under the Plan.
Non-Oual i f -1 ed Option means an option which is not
intended to qualify as an ISO.
Option means an ISO or Non-Qualified Option granted
under the Plan.
On t ion Agreement means an agreement between the Company
and a Participant executed and delivered pursuant to
Participant means a Key Employee, director or
consultant to whom one or more Options are granted
under the Plan. As used herein, "Participant" shall
include "Participant's Survivors" where the context
Participant ' r- Survivors means a deceased Participant 's
■legal representatives and/or any person or persons who
acquired the Participant's rights to an Option by will
or by the laws of descent and distribution.
Plan means this America Online, Inc. 1992 Employee,
Director and Consultant Stock Option Plan.
Shares means shares of the Common Stock as to which
Options have been or may be granted under the Plan or
any shares of capital stock into which the Shares are
changed or for which they are exchanged within the
provisions of Paragraph 3 of the Plan. The Shares
issued upon exercise of Options granted under the Plan
may be authorized and unissued shares or shares held by
the Company in its treasury, or both.
2 . PURPOSES OF THE PLAN .
The Plan is intended to encourage ownership of Shares by Key
Employees, directors and certain consultants to the Company in
order to attract such people, to induce them to work for the
benefit of the Company or of an Affiliate and to provide
additional incentive for them to promote the success of the
Company or of an Affiliate. The Plan provides for the issuance
of ISOs and Non-Qualified Options.
3 . SHARES SUBJECT TO THE PLAN .
The number:, of -.Shares, subject to this Plan as to which
Options may^,be -granted, from, time to time shall be 130,000
(increased , to 260, 000 effective upon the stock split approved by
the Company's Board of Directors on the date hereof), or the
equivalent of such number of Shares after the Administrator, in
its sole discretion, has interpreted the effect of any stock
split, stock dividend, combination, recapitalization or similar
transaction effected after such date in accordance with Paragraph
16 of the Plan.
If an Option ceases to be "outstanding", in whole or in
part, the Shares which were subject to such Option shall be
available for the granting of other Options under the Plan. _ Any
Option shall be treated as "outstanding" until such Option is
exercised in full, or terminates or expires under the provisions
of the Plan, or by agreement of the parties to the pertinent
4 . ADMINISTRATION.: OF THE "PLAN .
The Administrator of - the Plan will be the Board of
Directors, except to the extent the Board of Directors delegates
its authority to a Committee of the Board of Directors.
Following the date on which the Common Stock is registered under
the Securities and Exchange Act of 1934, as amended (the "1934
Act"), the Plan is intended to comply in all respects _ with Rule
16b- 3 or its successors, promulgated. pursuant to Section 16 of
the 1934 Act with respect to Participants who are subject to_
Section 16 of the 1934 Act, and any provision in this Plan with
respect to such persons contrary to Rule 16b- 3 shall be deemed
null and void to the extent permissible by law and deemed
appropriate by the Administrator. Subject to the provisions of
the Plan, the Administrator is authorized to:
a. Interpret the provisions of the Plan or of any Option
or Option Agreement and to make all rules and
. determinations which it deems necessary or advisable
for the administration of the Plan;
b. Determine which employees of the Company or of an
Affiliate shall be designated as Key Employees and
which of the Key Employees, directors and consultants
shall be granted Options;
c. Determine the number of Shares for which an Option or
Options shall be granted; and
d. Specify the terms and conditions upon which an Option
or Options may be granted;
provided,, however, that all such interpretations, rules,
determinations, -..terms -and conditions shall be made and
prescribed-.in:,the . context of preserving the tax status under
Code Section 422 of those Options which are designated as
ISOs. Subject to the foregoing, the interpretation and
construction by the Administrator of any provisions of the
Plan or of any Option granted under it shall be final,
unless otherwise determined by the Board of Directors, if
the Administrator is other than the Board of Directors.
5. ELIGIBILITY FOR PARTICIPATION .
The: Administrator will, in its sole discretion, name the
Participants in the Plan, provided, however, that each
Participant must be a Key Employee, director or consultant of the
Company or of an Affiliate at the time an Option is granted.
Notwithstanding ;any of the foregoing provisions, the
Administrator may authorize the grant of an Option to a person
not then an. employee, director or consultant of the Company or of
an Affiliate. . The actual.,. grant of such Option, however, shall be
N conditioned; upon, -such .person becoming eligible to become a
Participant at or prior to the time of the execution of the
Option Agreement evidencing such Option. ISOs may be granted
only to Key Employees. Non-Qualified Options may be granted to
any Key Employee, director or consultant of the Company or an
Affiliate. The granting of any Option to any individual shall
neither entitle that individual to, nor disqualify him or her
from, participation in any other grant' of Options.
6, TERMS AND CONDITIONS OF OPTIONS .
Each option shall be set forth in writing in an Option
Agreement, duly executed by the Company and by the Participant.
Th6A Administrator may provide that Options be granted subject to
such conditions as the Administrator may deem appropriate
including, without limitation, subsequent approval by the
stockholders of the Company of this Plan or any amendments
thereto. The Option Agreements shall be subject to at least the
following terms and conditions:
A. Non-Oualif ied Options : Each Option intended to be a
Non-Qualified Option shall be subject to the terms and
conditions which the Administrator determines to be
appropriate and in the best interest of the Company,
subject to the following minimum standards for any such
a. Option Price: The option price (per share) of _ the
Shares covered by each Option shall be determined
by the Administrator but shall not be less than
the par value per share of Common Stock.
b. Each Option Agreement shall state the number of
Shares to which it pertains;
c. Each Option Agreement shall state the date or
dates on which it first is exercisable and the
date after which it may no longer be exercised,
and may provide that the Option rights accrue _ or
become exercisable in installments over a period
of months or years, or upon the attainment of
stated goals; and
d. Exercise of any Option may be conditioned upon the
Participant's execution of a Share purchase
agreement in form satisfactory to the
Administrator providing for certain protections
for the Company and its other shareholders
including requirements that:
i. The Participant's or the Participant's
Survivors' right to sell the Shares may be
ii. The Participant or the Participant's
Survivors may be required to execute letters
of investment intent and must also
acknowledge that the Shares will bear legends
noting any applicable restrictions.
B. iSOs : Each Option intended to be an ISO shall be
issued only to a Key Employee and be subject to at
least the following terms and conditions, with such
additional restrictions or changes as the Administrator
determines are appropriate but not in conflict with
Code Section 422 and relevant regulations and rulings
of the Internal Revenue Service:
a. Minimum standards: The ISO shall meet the minimum
standards required of Participants who are granted
Non- Qualified Options, as described above, except
clause (a) thereunder.
b. Option Price: Immediately before the Option is
granted, if the Participant owns, directly or by
reason of the applicable attribution rules in Code
Section 424 (d) :
i. Ten percent (10%) or less of the total
combined voting power of all classes of share
capital of the Company or an Affiliate, the
Option price (per share) of the Shares
covered by each Option shall not be less than
one hundred percent (100%) of the Fair Market
Value (per share) of the Shares on the date
of the grant of the Option.
ii. More than ten percent (10%) of the total
combined voting power of all classes of share
capital of the Company or an Affiliate, the
Option price (per share) of the Shares
covered by each Option shall not be less than
one hundred ten percent (110%) of the said
Fair Market Value on the date of grant.
c. Term of Option: For Participants who own
i. Ten percent (10%) or less of the total
combined voting power of all classes of share
capital of the Company or an Affiliate, each
Option shall terminate not more than ten (10)
years from the date of the grant or at such
earlier time as the Option Agreement may
ii. More than 10% of the total combined voting
power of all classes of share capital of the
Company or an Affiliate, each Option shall
terminate not more than five (5) years from
the. date of the grant or at such earlier time
as the Option Agreement may provide.
d. Medium of Payment: The Option price shall be
payable upon the exercise of the Option and only
in such form as the Administrator determines and
as is permitted by Section 422 of the Code.
e. Limitation on Yearly Exercise: The Option
Agreements shall restrict the amount of Options
which may be exercisable in any calendar year
(under this or any other ISO plan of the Company
or an Affiliate) so that the aggregate Fair Market
Value (determined at the time each ISO is granted)
of the stock with respect to which ISOs are
exercisable for the first time by the Participant
in any calendar year does not exceed one hundred
thousand dollars ($100,000), provided that this
subparagraph (e) shall have no force or effect if
its inclusion in the Plan is not necessary for
Options issued as ISOs to qualify as ISOs pursuant
to Section 422(d) of the Code.
f . Limitation on Grant of ISOs: No ISOs shall be
granted after February 3, 2002, the date which is
the earlier of ten (10) years from the date of the
adoption, of- the Plan by the Company and the date
of the- approval of the Plan by the shareholders of
C. Directors' Options : On November 1 of each year, each
director who is not an employee of the Company or any
Affiliate shall be granted a Non-Qualified Option to
purchase 1,000 Shares (increased to 2,000 Shares
effective upon the stock split approved by the
Company's Board of Directors on the date hereof). Each
such Option shall (i) have an exercise price equal to
the Fair Market Value (per share) of the Shares on the
date of grant of the Option, (ii) have a term of ten
(10) years, and (iii) be exercisable upon completion of
one full year of service on the Board of Directors
after the date of grant. Notwithstanding the
provisions of Paragraph 23 concerning amendment of the
Plan, 'the provisions of this Subparagraph C shall not
be amended. more, than once every six months, other than
to comport- with, changes in the Code, the Employee
Retirement-Income Security Act, or the rules
RXRRCISE OF OPTION AND ISSTTF/ OF SHARES.
An Option (or any part or installment thereof) shall be
exercised by giving written notice to the Company at its
principal office address, together with the tender of the full
purchase price for the Shares as to which such Option- is being
exercised, and upon compliance with, any other condition (s) set
forth in the Option Agreement. Such written notice shall be
siqned by the person exercising the Option, shall state the
number of Shares with respect to which the Option is being
exercised and shall contain any representation required by the _
Plan or the Option Agreement. Full payment of the purchase price
for the Shares as to which such Option is being exercised shall
be made (a) in United States dollars in cash or by check, or (b)
at the discretion of the Administrator, through delivery of
shares of Common Stock having a fair market value equal as of the
date of the exercise to the cash exercise price of the Option,
determined in good faith by the Administrator, or (c) at the
discretion of the Administrator, by delivery of the grantee's
personal recourse note bearing interest payable not less than
annually at no less than 100% of the applicable Federal rate, as
defined in Section 1274(d) of the Code, or (d) at the discretion
of the Administrator, by any combination of (a) , _ (b) and (c)
above. Notwithstanding the foregoing, the Administrator shall
accept only such payment on exercise of an ISO as is permitted by
Section 422 of the Code.
The' Company, shall . then reasonably promptly deliver the
Shares as to which such Option was exercised to the Participant
(or to the Participant's Survivors, as the case may be). In
determining what constitutes "reasonably promptly," it is
expressly understood that the delivery of the Shares may be
delayed by the Company in order to comply with any law or _
regulation which requires the Company to take any action with
respect to the Shares prior to their issuance. The Shares shall,
upon delivery, be evidenced by an appropriate certificate or
certificates for fully paid, non-assessable Shares.
The Administrator shall have the right to accelerate the
date of exercise of any installment of any Option; provided that
the Administrator shall not accelerate the exercise date of any
installment of any Option granted to any Key Employee as an ISO
(and not previously converted into a Non-Qualified Option
pursuant to paragraph 19) if such acceleration would violate the
annual vesting limitation.. contained in Section 422(d) of the
Code, as: described.' in paragraph 6.B. (e) .
8. RIGHTS AS A SHAREHOLDER .
No Participant to whom an Option has been granted shall have
rights as a shareholder with respect to any Shares covered by
- 8 -
such Option, except after due exercise of the Option and tender
of the full purchase price for the Shares being purchased
pursuant to such exercise and registration of the Shares m the
Company's share register in the name of the Participant.
9. ASSIGNABIT.TTY AND TRANSFERAB ILITY OF OPTIONS.
By its terms, an Option granted to a Participant shall not
be transferable by the Participant other than by will or by the
laws of descent and distribution and shall be exercisable, during
the Participant's lifetime, only by such Participant (or by his
or her legal representative) . Such Option shall not be assigned,
pledged or hypothecated in any way (whether by operation of law
or otherwise) and shall not be subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge,
hypothecation or other disposition of any Option or of any rights
granted thereunder contrary to the provisions of this Plan, or
the levy of any attachment or similar process upon an Option,
shall be null and void.
10. EFFECT OF TERMINATION OF SERVICE OTHE R THAN "FOR CAUSE".
Except as otherwise provided in the pertinent Option
Agreement, in the event of a termination of service (whether as
an employee, . director or- consultant) with the Company or an
Affiliate before. the . Participant has exercised all Options, the
following rules apply: .
a. A Participant who ceases to be an employee, director or
consultant of the Company or of an Affiliate (for any
reason other than termination "for cause". Disability,
or death for which events there are special rules in
Paragraphs 11, 12, and 13, respectively), may exercise
any Option granted to him or her to the extent that the
right to purchase Shares has accrued on the date of
such termination of service, but only within such term
as the Administrator has designated in the pertinent
b. In no event may an Option Agreement provide, if the
Option is intended to be an ISO, that the time for
exercise be later than three (3) months after the
Participant's termination of employment.
c. The provisions -of this paragraph, and not the
provisions of -Paragraph 12 or 13, shall apply to a_
Participant who subsequently becomes disabled or dies
after the termination of employment, director status or
consultancy, provided, however, in the case of a
Participant's death within three (3) months after the
termination of employment, director status or
consultancy, the Participant's Survivors may exercise
the Option within one (1)' year after the date of the
Participant's death, but in no event after the date of
expiration of the term of the Option.
d. Notwithstanding anything herein to the contrary, if
subsequent to a Participant's termination of
employment, termination of director status or
termination of consultancy, but prior to the exercise
of an Option, the Board of Directors determines that,
either prior or subsequent to the Participant's
termination, the Participant engaged in conduct which
would constitute "cause", then such Participant shall
forthwith cease to have any right to exercise any
e. A Participant to whom an Option has been granted under
the Plan who is absent from work with the Company or
with an Affiliate because of temporary disability _ (any
disability other than a permanent and total Disability
as defined in Paragraph 1 hereof) , or who is on leave ■
of absence for any purpose, shall not, during the
period of any such absence, be deemed, by virtue of
such absence alone, to have terminated such
Participant's employment, director status or
consultancy with the Company or with an Affiliate,
except .as. the Administrator may otherwise expressly
f . Options granted under the Plan shall not be affected by
any change of employment or other service within or
among the Company and any Affiliates, so long as the
Participant continues to be an employee, director or
consultant of the Company or any Affiliate, provided,
however, if a Participant's employment by either the
Company or an Affiliate should cease (other than to
become an employee of an Affiliate or the Company) ,
such termination shall affect the Participant's rights
under any Option granted to such Participant in
accordance with the terms of the Plan and the pertinent
11. EFFECT OF .TERMINATION OF SERVICE "FOR CAUSE" .
Except. as' Otherwise, provided in the pertinent Option
Agreement, the following- rules apply if the Participant's service
(whether as an employee, director or consultant) with the Company
or an Affiliate is terminated "for cause" prior to the time that
all of his or her outstanding Options have been exercised:
a. All outsta,nding and unexercised Options as of the date
the Participant is notified his or her service is
terminated "for cause" will iirmediately be forfeited,
unless the Option Agreement provides otherwise.
b. For purposes of this Article, "cause" shall • include
(and is not limited to) dishonesty with respect to the
employer, insubordination,' substantial malfeasance or
non-feasance of duty, unauthorized disclosure of
confidential information, and conduct substantially
prejudicial to the business of the Company or any
Affiliate. The determination of the Administrator as
to the existence of cause will be conclusive on the
Participant and the Company.
c. "Cause" is not limited to events which have occurred
prior to a Participant's termination of service, nor is
it necessary that the Administrator's finding of
"cause" occur prior to termination. If the
Administrator determines, subsequent to a Participant's
termination of service but prior to the exercise of an
Option, that either prior or subsequent to the
Participant's termination the Participant engaged in
conduct which would constitute ''cause", then the right
to exercise any Option is forfeited.
d. Any definition ..in an agreement between the Participant
and the Company or an Affiliate, which contains a
conflicting definition of "cause" for termination and
which is in effect at the time of such termination,
shall supersede the definition in this Plan with
respect to such Participant.
12. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY .
Except, as otherwise provided in the pertinent Option
Agreement, a Participant who ceases to be an employee, director
or consultant of the Company or of an Affiliate by reason of
Disability may exercise any Option granted to such Participant:
a. To the extent that the right to purchase Shares has
accrued on the date of his or her Disability; and
b. In the event . rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of
any additional rights as would have accrued had the
Participant not" become Disabled prior to the end of the
accrual period which next ends following the date of
Disability. The proration shall be based upon the
number of days of such accrual period prior to the date
A Disabled Participant may exercise such rights only within
a period of not more than one (1) year after the date that the
Participant became Disabled, notwithstanding that the Participant
might have been able to exercise the Option as to some or all of
the Shares on a later date if he or she had not become disabled
and had continued to be an employee, director or consultant or,
if earlier, within the originally prescribed term of the Option.
The Administrator shall make the determination both of
whether Disability has occurred and the date of its occurrence
(unless a procedure for such determination is set forth in
another agreement between the Company and such Participant in
which case such procedure shall be used for such determination) .
If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which
examination shall be paid for by the Company.
13 . EFFECT OF DEATH WHILE AN EMPLOYEE. DIRECTOR OR CONSULTANT .
Except as otherwise provided in the pertinent Option
Agreement, in the event of the death of a Participant to whom an
Option has been granted while the Participant is an employee,
director or consultant of the Company or of an Affiliate, such
Option may be exercised by the Participant's Survivors:
a. To the extent exercisable but not exercised on the date
of death; and .
b. In the event rights to exercise the Option accrue
periodically, to -the extent of a pro rata portion of
any additional rights which would have accrued had the
Participant not died prior to the end of the accrual
period which next ends following the date of death.
The proration shall be based upon the number of days of
such accrual period prior to the Participant's death.
If the Participant's Survivors wish to exercise the Option,
they must take all necessary steps to exercise the Option within
one (1) year after the date of death of such Participant,
notwithstanding that the decedent might have been able to
exercise the Option as to some or all of the Shares on a later
date if he or she had not died and had continued to be an
employee, director or consultant or, if earlier, within the
originally prescribed term of the Option.
14 . PURCHASEvFOR INVESTMENT .
Unless the offering and sale of the Shares to be issued upon
the particular exercise of an Option shall have been effectively
registered under the Securities Act of 1933, as now in force or
hereafter amended (the "1933 Act") , the Company shall be under no
obligation to issue the Shares covered by such exercise unless
and until the following conditions have been fulfilled:
a The person (s) who exercise such Option shall warrant to
the Company, at the time of such exercise or. receipt,
as the case may be, that such person (s) are acquiring
such Shares for their own respective accounts, for
investment, and not with a view to, or for sale m
connection with, the distribution of any such Shares,
in which event the person (s) acquiring such Shares
shall be bound by the provisions of the following
legend which shall be endorsed upon the certificate (s)
evidencing their Shares issued pursuant to such
exercise or such grant:
"The shares represented by this certificate have
been taken for investment and they may not be sold
or otherwise transferred by any person, including
a pledgee, unless (1) either (a) a Registration
Statement with respect to such shares shall be
effective under the Securities Act of 1933, as
amended, or (b) the Company shall have received an
opinion of counsel satisfactory to it that an
exemption from registration under such Act is then
available, and (2) there shall have been
compliance. with all applicable state securities
b The Company shall have received an opinion of its
counsel that the Shares may be issued upon such
particular exercise in compliance with the 1933 Act
without registration thereunder.
The Company may delay issuance of the Shares until _
completion, of any action or obtaining of any consent which the
Company deems necessary under any applicable law (including,
without limitation, state securities or "blue sky" laws) .
15. nTSSOLUTION OR LIQTTIDATION OF THE COMPANY.
Upon the dissolution or liquidation of the Company, all
Options granted binder this Plan which as of such date shall not
have been exercised will terminate and become null and void;
provided, however, that if the rights of a Participant or a
Participant's Survivors have not otherwise terminated and
expired, the. Participant, or the Participant's Survivors will have
the right immediately prior to such dissolution or liquidation to
exercise any Option to the extent that the right to purchase
Shares has accrued under the Plan as of the date immediately
prior to such dissolution or liquidation.
16 . ADJUSTMENTS .
Upon the occurrence of any of the following events, a
Participant's rights with respect to any Option granted to him or
her hereunder which have not previously been exercised in full
shall be adjusted as hereinafter provided, unless otherwise
specifically provided in the written agreement between the
Participant and the Company relating to such Option:
A. Stock Dividends and Stock Splits . If the shares of
Common Stock shall be subdivided or combined into a greater or
smaller number of shares or if the Company shall issue any shares
of Common Stock as a stock dividend on its outstanding Common
Stock, the number of shares of Common Stock deliverable upon the
exercise of such Option shall be appropriately increased or
decreased proportionately, and appropriate adjustments shall be
made in the purchase price per share to reflect such subdivision,
combination or stock dividend.
B. Consolidations or Mergers . If the Company is to be
consolidated with or acquired by another entity in a merger, sale
of all or substantially all of the Company's assets or otherwise
(an "Acquisition")", the Administrator or the board of directors
of any entity assuming the obligations of the Company hereunder
(the "Successor Board".)-, ■ shall, as to outstanding Options, either
(i) make -appropriate ; provision for the continuation of such
Options . by substituting. .on an equitable basis for the Shares then
subject to such- Options either the consideration payable with
respect to the outstanding shares of Common Stock in connection
with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide
that all Options must be exercised, to the extent then
exercisable, within a specified number of days of the date of
such notice, at the end of which period the Options shall
terminate;,: or (iii) terminate all Options in exchange for a cash
payment equal to the excess of the fair market value of the
shares subject to such Options (to the extent then exercisable)
over the. exercise price thereof.
C. Recapitalization or Reorganization . In the event of a
recapitalization or reorganization of the Company (other than a
transaction described in subparagraph B above) pursuant to which
securities of the Company or of another corporation are issued
with respect to the outstanding shares of Common Stock, a
Participant upon exercising an Option shall be entitled to
receive, for the purchase price paid upon such exercise the
securities he or she would have received if he or she had
exercised such Option prior to such recapitalization or
D, Modification of ISOs . Notwithstanding the foregoing,
any adjustments made pursuant to subparagraphs A, B or C with
respect to ISOs shall be made only after the Administrator, after
consulting with counsel for the Company, determines whether such
adjustments would constitute a "modification" of such ISOs (as
that term is defined in Section 424(h) of the Code) or would
cause any adverse tax consequences for the holders of such ISOs.
If the Administrator determines that such adjustments made with
respect to ISOs would constitute a modification of such ISOs, it
may refrain from making such adjustments, unless the holder of an
ISO specifically requests in writing that such adjustment be made
and such writing indicates that the holder has full knowledge of
the consequences of such "modification" on his or her income tax
treatment with respect to the ISO.
17. ISSUANCES OF SECURITIES .
Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to,
the number or price of shares subject to Options. Except as
expressly provided" herein, no adjustments shall be made for
dividends paid in cash or in property (including without
limitation, securities), of the Company.
18. FRACTIONAL" SHARES .
No fractional share shall be issued under the Plan and the
person exercising such right shall receive from the Company cash
in lieu of such fractional share equal to the fair market value
thereof determined in good faith by the Board of Directors of the
19 . CONVERSION OF ISOs INTO NON-OUALIFIED OPTIONS:
TERMINATION OF ISOs .
The Administrator, at the written request of any
Participant, may in its discretion take such actions as may be
necessary to convert such Participant's ISOs (or any portions
thereof) that have not been exercised on the date of conversion
into Non-Qualified Options at any time prior to the expiration of
such ISOs,. regardless of whether the Participant is an employee
of the Company .or an Affiliate at the time of such conversion.
Such actions; may: include, but not be limited to, extending the
exercise period- or reducing the exercise price of the appropriate
installments of such Options. At the time of such conversion,
the Administrator (with the consent of the Participant) may
impose such conditions on the exercise of the resulting
Non-Qualified Options as the Administrator in its discretion may
determine, provided that such conditions shall not be
inconsistent with this Plan. Nothing in the Plan shall be deemed
to give any Participant the right to have such Participant's
ISO's converted into Non-Qualified Options, and no such
conversion shall occur until and unless the Administrator takes
appropriate action. The Administrator, with the consent of the
Participant, may also terminate any j)ortion of any ISO that has
not been exercised at the time of such termination.
20. WITHHOLDING .
Upon the exercise of a Non-Qualified Option for less than
the then Fair Market Value or the making of a Disqualifying
Disposition (as defined in paragraph 21) , the Company may
withhold from the Participant's wages, if any, or other _
remuneration, or may require the Participant to pay additional
federal, state, and local income tax withholding and employee
contributions to employment taxes in respect of the amount that
is considered compensation includible in such person's gross
income. The Administrator in its discretion may condition the
exercise of an Option for less than the then Fair Market Value on
the Participant's payment of such additional income tax
withholding and employee contributions to employment taxes.
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
Each Key Employee who receives an ISO must agree to notify
the Company in writing immediately after the Key Employee makes a
Disqualifying Disposition of any shares acquired pursuant to the
exercise of an ISO. A Disqualifying Disposition is any
disposition (including any sale) of such shares before the later
of ■ (a) two years after the date the Key Employee was granted the
ISO, or (b) one year after the date the Key Employee acquired
shares by exercising the ISO. If the Key Employee has died
before such stock is sold, these holding period requirements do
not apply and no Disqualifying Disposition can occur thereafter.
22 . TERMINATION OF THE PLAN .
The Plan will terminate on February 3, 2002, the date which
is ten (10) year's from the earlier of the date of its adoption
and the date, of. its approval by the stockholders of the Company.
The Plan may be terminated at an earlier date by vote of the
stockholders of ; the' Company; provided, however, that any such _
earlier termination will not affect any Options granted or Option
Agreements executed prior to the effective date of such
23 . AMENDMENT OF THE PLAN .
The Plan may be amended by the' stockholders of _ the Company.
The Plan may also be amended by the Administrator, including,
without limitation, to the extent necessary to qualify any or all
outstanding Options granted under the Plan or Option's to be
granted under the Plan for favorable federal income tax treatment
(including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code, to the
extent necessary to ensure the qualification of the Plan under
Rule 16b- 3, and to the extent necessary to qualify the shares
issuable upon exercise of any outstanding Options granted, or
Options to be granted, under the Plan for listing on any national
securities exchange or quotation in any national automated
quotation system of securities dealers. Any amendment approved
by the Administrator which is of a scope that requires
stockholder approval in order to ensure favorable federal income
tax treatment for any incentive stock options or requires
stockholder approval in order to ensure the compliance of the
Plan with Rule 16b- 3 shall be subject to obtaining such
stockholder approval. Any modification or amendment of the Plan
shall not, without the consent of a Participant, affect his or .
her rights under an Option previously granted to him or her.
With the consent oE the Participant affected, the Administrator
may amend outstanding Option Agreements in a manner not
inconsistent ; with, :.the-,, Plan.
24. EMPLOYMENT' OR' OTHER' RELATIONSHIP .
Nothing in this Plan or any Option Agreement shall be deemed
to prevent the Company or an Affiliate from terminating the
employment, consultancy or director status of a Participant, nor
to prevent. a Participant from terminating his or her own
employment, consultancy or director status or to give any
Participant a right to be retained in employment or other service
by the Company or any Affiliate for any period of time.
25 . GOVERNING LAW .
This Plan shall be construed and enforced in accordance with
the law of the State of Delaware.
AMENDMENT NUMBER ONE TO
AMERICA ONLINE, INC.
1992 EMPLOYEE, DIRECTOR AND
CONSULTANT STOCK OPTION PLAN
This Amendment Number One to the America Online, 'n^' J Employee,
Director and Consultant Stocl< Option Plan is made as of March 23, 1993.
1 The first paragraph of Section 3 of the Plan, "Shares subject to the
Plan," is hereby deleted in its entirety and the following is substituted
The number of Shares subject to this Plan as to which
Options may be granted from time to time shall be 1,010,000,
or the equivalent of such number of Shares after the
Administrator, in its sole discretion, has interpreted the effect of
any stock split, stock dividend, combination, recapitalization or
similar transaction effected after such date in accordance with
Paragraph 1 6 of the Plan.
2. In all other respects the Plan shall remain in full force and effect.